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<ul><li><keyword id="80487" type="COMPANY" weightage="20" keywordseo="walmart">Walmart</keyword> had acquired a 77% stake in <keyword id="6354742" type="COMPANY" weightage="20" keywordseo="Flipkart">Flipkart</keyword> for a whopping $16 billion in 2018.</li><li>Walmart had paid a withholding <keyword id="45031" type="PERSON" weightage="20" keywordseo="Tax">tax</keyword> of ₹7,439 crore for the 10 major shareholders of Flipkart who exited back then. </li><li>But now foreign investors have moved the Authority of Advance Rulings (AAR) to get more clarity on the taxability of the capital gains on the deal. </li></ul>Walmart bought Flipkart in May 2018. Now, 22 months later, the investors who sold their shares in Flipkart are seeking clarity on the tax deducted for the profit they made from the deal from Authority of Advance Rulings (AAR). Walmart had acquired a 77% stake in Flipkart for a whopping $16 billion in 2018, making it one of the biggest e-commerce deals in the world. The firms which had exited from Flipkart were <keyword id="163404" type="COMPANY" weightage="20" keywordseo="Softbank">SoftBank</keyword>, Nexus, Accel Partners, eBay among others. While the American retail giant paid a withholding tax of ₹7,439 crore to buy out the ten major shareholders of Flipkart, it had <a href="https://economictimes.indiatimes.com/industry/services/retail/walmart-paid-rs-7439-cr-tax-on-flipkart-deal-did-not-deduct-taxes-from-34-shareholders/articleshow/65827928.cms?from=mdr">reportedly</a> not paid taxes for the 34 other smaller investors. "The authority has taken up some of the cases this month itself and may take four to five months to get a final order on the matter," said a tax official told <a href="https://www.business-standard.com/article/companies/tax-thorns-haunt-walmart-flipkart-deal-foreign-shareholders-want-clarity-120022700036_1.html">Business Standard. </a> What is withholding tax? The buyer (in this case, Walmart) is supposed to set aside 20% (in case of long-term capital gains) of the money to be paid to the seller as withholding and transfer it to the government. The amount is deducted from the payment to the recipient (in this case, the major shareholders of Flipkart who exited from the deal). The tax rate could be lower in case the non-resident seller invokes the provision of the double tax avoidance agreement. Walmart has already deducted, and paid the government, ₹7,439 crore by way of withholding tax. What do the former investors of Flipkart want? Lower tax deduction certificates. It enables non-residents to ensure that tax is deducted not on the sale price but on their taxable capital gains arising from such sale. Essentially, the tax on the seller will be lower. What is the process to be followed now? Foreign firms have been asked to file tax returns so that they can claim refunds if there is merit in their argument. What is the issue? It’s been 22 months since the deal was struck but lack of clear policy has left foreign investors wondering. Making matters worse, as the official reportedly said, it may take another 4-5 months for the matter to settle. So much for boosting India's <a href="https://economictimes.indiatimes.com/news/economy/indicators/india-jumps-to-63rd-position-in-world-banks-doing-business-2020-report/articleshow/71731589.cms?from=mdr">ease of doing business</a>. See Also: <a href="https://www.businessinsider.in/business/ecommerce/news/amazon-flipkart-get-2-month-relief-from-karnataka-high-court-over-a-cci-investigation/articleshow/74136780.cms">Amazon, Flipkart get 2-month relief from Karnataka High Court over a CCI investigation</a>

Ease of doing business? 22 months after Walmart bought Flipkart the tax on the deal is still unclear

<ul><li>Morgan Stanley has warned that Walmart may exit from Flipkart. </li><li>India’s new e-commerce rule brought in tighter FDI guidelines in order to boost Indian marketplaces. </li><li>Under new rules, Flipkart will have to do away with 25% of its products on the platform.</li></ul>Walmart’s biggest ever deal in history could soon be a thing of the past. Walmart’s acquisition of Indian unicorn Flipkart for $16 billion was one of the world’s biggest e-commerce deals. It now stands in jeopardy as the retail giant could make an exit from Flipkart in the wake of India’s <keyword id="7170085" type="UNKNOWN" weightage="20" keywordseo="new-e-commerce-rules">new e-commerce rules</keyword>, according to a report by <a href="https://economictimes.indiatimes.com/industry/services/retail/morgan-stanley-warns-walmart-may-exit-flipkart-post-new-fdi-rules/articleshow/67843595.cms">Morgan Stanley</a>, which said an exit by Walmart is not out of the question with the Indian e-commerce market becoming “more complicated.” “Despite the recent changes in regulations, we remain optimistic abo the ecommerce opportunity in India given the size of the market, the low penetration of ecommerce in the retail channel and the pace at which it is growing. As Walmart scales in India, the company will continue to partner to create sustained economic growth across agriculture, food and retail. Future investments will support national initiatives and will bring sustainable benefits to the country,” a Walmart spokesperson told <a href="https://economictimes.indiatimes.com/industry/services/retail/morgan-stanley-warns-walmart-may-exit-flipkart-post-new-fdi-rules/articleshow/67843595.cms">ET.</a> India’s new e-commerce rules have introduced tighter guidelines that govern Indian e-commerce companies. With the new rules, global players like Amazon or the Walmart-Flipkart entity, are barred from selling products from vendors they have own a stake in. According to the Morgan Stanley report, Flipkart will have to do away with 25% of its products on the platform. The new rules have mounted tremendous pressure on both Amazon and Flipkart, which together command over <a href="https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/amazon-india-reportedly-closing-in-on-flipkart/articleshow/63407725.cms">60%</a> of the market share in Indian e-commerce. According to a report in <a href="https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/amazon-flipkart-sales-fall-a-third-as-fdi-norms-kick-in/articleshow/67826139.cms">ET</a>, Amazon and Flipkart saw a third of their sales volume disappear in just three days, after the new rules came in. Last week, Amazon <a href="https://www.businessinsider.in/amazon-india-finds-way-around-new-e-commerce-rules-for-cloudtail-and-appario/articleshow/67831376.cms">reportedly</a> already began removing several items from its website sold via its vendor Cloudtail including products under the brand name “Amazon Basics”. Walmart which has <a href="http://fortune.com/2018/02/20/walmart-ecommerce-3/">failed</a> to make an impact on e-retail globally, had placed its bets on Flipkart to start off its digital wing. Flipkart being one of the biggest e-commerce platforms of India, put Walmart in direct competition with Amazon. However, with the change in scenario it is possible that Walmart might not want to incur a <a href="https://www.bloombergquint.com/technology/walmart-expects-flipkart-to-suffer-rs-5300-crore-loss-this-year#gs.JsJmhTUD">loss</a> in India. See Also: <a href="https://www.businessinsider.in/amazon-india-finds-way-around-new-e-commerce-rules-for-cloudtail-and-appario/articleshow/67831376.cms">Amazon may have found a way around India’s new e-commerce rules</a> <a href="https://www.businessinsider.in/amazon-and-walmart-which-owns-flipkart-stocks-on-sale-as-indias-new-e-commerce-policy-kicks-in/articleshow/67807890.cms">The sale on Amazon and Walmart stocks in US may worsen as new India's e-commerce rules kick in</a> <a href="https://www.businessinsider.in/amazon-walmart-owned-flipkart-set-back-by-new-e-commerce-rules-that-help-mukesh-ambanis-reliance-retail/articleshow/67751026.cms">Mukesh Ambani may be the surprise winner from India's new rules hurting Amazon and Walmart</a>

Walmart could exit from Flipkart because of India’s new FDI rules: Report

<ul><li>The <keyword id="5189" type="ORGANIZATION" weightage="20" keywordseo="competition">Competition</keyword> Commission of India (<keyword id="47183" type="ORGANIZATION" weightage="20" keywordseo="CCI">CCI</keyword>) has approved <keyword id="80487" type="COMPANY" weightage="20" keywordseo="walmart">Walmart</keyword>’s <keyword id="30334" type="ORGANIZATION" weightage="20" keywordseo="acquisition">acquisition</keyword> of a 77% stake in <keyword id="6354742" type="COMPANY" weightage="20" keywordseo="Flipkart">Flipkart</keyword>. </li><li>The deal, which is slated for completion next year, will be one of the largest in India’s corporate history. </li><li>The greenlight marks the culmination of three months of deliberations by the CCI over the validity of the deal.</li></ul>The investors of Flipkart can rejoice for they’re about to earn a very handsome profit on their investment in the Indian e-commerce platform. The Competition Commission of India (CCI), the country’s competition and antitrust regulator, has approved Walmart’s $16 billion acquisition of a 77% stake in Flipkart, paving the way for the deal to be completed by mid-2019. The deal is the one of the largest in the history of India’s private sector. 
 
 
 
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 The greenlight marks the culmination of three months of deliberations over the validity of the deal. Reports surfaced in June that the regulator would impose structural changes to the deal to alleviate antitrust concerns. An example of this was the possible establishment of a long-term fund to support small businesses and kirana stores. Walmart announced the acquisition in May 2018. However, the deal has received a lot of backlash from industry bodies, specifically the Confederation of All India Traders (CAIT), which said that the deal would <a href="https://www.businessinsider.in/indias-small-businesses-are-against-walmarts-acquisition-of-flipkart/articleshow/64064439.cms">hurt competition and encourage “predatory pricing” tactics</a> and loss leadership in India’s e-commerce market. In its ruling, the CCI expressed its concern at the habits of deep discounting and preferential access to sellers that are so intrinsic to the industry. However, it said that these habits did not have a bearing on whether or not the deal should be approved. The CCI added that the deal would not “adversely affect competition” in the sector. In response to the <keyword id="49677" type="CITY" weightage="20" keywordseo="approval">approval</keyword>, the CAIT has said it will file an appeal in court. However, the CCI’s decision is likely final. As per the Indian government’s draft e-commerce policy, a regulator will be established for the sector. The policy also calls for the localisation of data, the increased participation of small businesses on online retail platforms and limits the amount of influence a platform has on cutting prices by preventing bulk purchases of goods from third-party sellers and introducing a pre-determined discount window. Next steps for Walmart and Flipkart With the deal sealed, Walmart is expected to send a large group of senior executives to India to oversee the merger and analyse the Indian market. It will also onboard a number of private labels and vendors to Flipkart’s platform. Meanwhile, Flipkart is readying the rollout of its online grocery operation - Supermart. It will reportedly <a href="https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/flipkart-has-a-264-million-plan-for-grocery-store-supermart/articleshow/65331338.cms">invest $264 million</a> in the business over the next three years. After launching in Bengaluru earlier this summer, the service is expected to go live in Delhi, Chennai and Hyderabad by the end of 2018.

India’s competition regulator has given the Walmart-Flipkart deal a greenlight

<ul><li>The completion date for the deal has been shifted from March to June 2019. </li><li>In doing so, the US retail giant is giving itself more time to raise the $16 billion worth of funds required for the purchase to go through. </li><li><keyword id="80487" type="COMPANY" weightage="20" keywordseo="walmart">Walmart</keyword> is financing the deal through a large bond sale, but this might be harder than expected due to investor skepticism. </li></ul>Walmart is postponing the completion date for its acquisition of the 77% stake in Indian <keyword id="35621" type="PERSON" weightage="20" keywordseo="e-commerce">e-commerce</keyword> upstart <keyword id="6354742" type="COMPANY" weightage="20" keywordseo="Flipkart">Flipkart</keyword> to 7 June 2019. This is around three months after the original deadline that was set for 9 March, as stipulated in the share purchase agreement. In doing so, the US retail giant is giving itself more time to raise the $16 billion worth of funds required for the purchase to go through. It is financing the deal through the issue of a <a href="https://www.livemint.com/Companies/0wLpb3dAlDTAdTduaBVEUO/Walmart-kickstarts-mega-fundraising-to-finance-Flipkart-deal.html">nine-tiered bond offering </a>in the US. If it isn’t able to raise the full amount by June, the deal could be in danger of falling apart. The company, however, still maintains that the deal could close by the end of 2018 if the bond issue proves extremely successful. This scenario is unlikely, however, given the level of skepticism regarding the deal on Wall Street, Walmart is provisioning for a longer funding schedule. In May, <a href="https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/44541109">a report on S&amp;P Global Ratings</a>, a credit rating agency, referred to the acquisition as Walmart’s “second pricey deal for an unprofitable e-commerce startup” following the purchase of Jet.com for $3.3 billion in August 2016. The agency lowered its outlook for Walmart from “neutral” to “negative”, given its decision to partly fund the deal with debt. A number of analysts cited tremendous costs associated with growing an e-commerce company, something that Walmart has no track record of achieving successfully, as well as the competition posed by <keyword id="18635" type="CITY" weightage="20" keywordseo="Amazon">Amazon</keyword> in India. It was predicted that the deal would result in significant losses in the short term for Walmart. Opposition to the deal A lack of demand for the bond offering isn’t the only potential problem that Walmart has to deal with in the near term. It has to a get a spate of regulatory approvals in India, including a go-ahead from the Competition Commission. Regulatory authorities will have to take into consideration any possible threats to the livelihoods of business owners and competition in the industry as a result of the deal. Walmart and Flipkart have consistently said that their combined entity will not be a consumer-facing retailer as much as a business-to-business seller, given Walmart’s lack of presence in the direct retail market in India. Around one million traders and small business owners are planning to hold a nationwide protest against the deal today, citing Walmart’s habit of deep discounting, undercutting suppliers as well as sourcing goods from outside the country. The body organising the protest, the Confederation of All India Traders (CAIT), has also stated that it could challenge the deal in court if it gets regulatory approval. Apart from the deal being cancelled, the CAIT’s major request is for the government to formulate a national e-commerce policy, which will provide for the establishment of an exclusive regulator for the industry. Given that it is an election year, the Modi administration will have to tread lightly. On one hand, it has to prove its business-friendly credentials, but on the other, it has to show that it cares about the needs of traders and owners of small businesses.

Walmart-Flipkart deal will take longer to close due to a possible delay in fundraising

<div class="KonaFilter image-container display-table"><div><div class="image on-image">Paras Griffin/Getty Images for 2017 ESSENCE FestivalPresident and CEO of Wal-Mart Stores, Inc Doug McMillon speaks onstage at the 2017 ESSENCE Festival presented by Coca-Cola at Ernest N. Morial Convention Center on June 30, 2017 in New Orleans, Louisiana.</div></div></div><ul><li><a href="http://markets.businessinsider.com/stocks/wmt-stock">Walmart</a> is planning to buy back $20 billion of its own shares over the next two years. </li><li>But its $16 billion Flipkart acquisition could put a dent in those plans, according to RBC Capital Markets analyst Scot Ciccarelli. </li><li><a href="http://markets.businessinsider.com/stocks/wmt-stock">Watch Walmart trade in real time here.</a></li></ul>There's a different risk to <a href="http://markets.businessinsider.com/stocks/wmt-stock">Walmart</a>'s Flipkart acquisition than what everybody's talking about. While most of the concern on Wall Street surrounding Walmart's Flipkart acquisition has centered on <a href="http://markets.businessinsider.com/news/stocks/walmarts-stock-price-next-acquisition-could-be-bust-2018-4-1022444456?utm_source=markets&amp;utm_medium=ingest">whether or not the Indian e-commerce giant can be profitable anytime soon</a>, RBC Capital Markets analyst Scot Ciccarelli is worried about something else: the cash Walmart has available for its share buyback program. "The company outlined plans to repurchase roughly $10 billion worth of shares in both 2018 and 2019," Ciccarelli wrote in a note out to clients Friday morning. "We question, however, whether the acquisition of Flipkart will have an impact on these plans." Earlier this month, Walmart announced plans to <a href="http://www.businessinsider.com/flipkart-walmart-buying-a-controlling-stake-2018-5">buy 77% of Flipkart for $16 billion</a>. Walmart announced in October that it <a href="http://www.businessinsider.com/walmart-stock-price-20-billion-buyback-announcement-2017-10">plans to buy back $20 billion of its stock</a> within the next two years. Half of that is supposed to take place in 2018, according to Ciccarelli. And there seems to have been a disconnect between how Walmart intends to execute this plan, and how the plan is actually unfolding. Walmart recently held a conference call regarding the Flipkart purchase, and indicated that it will hardly - if at all - deviate from the original buyback plan."On the May 9th call to discuss the acquisition, management indicated that it will 'continue our share buyback roughly as we talked about with you in October,'" Ciccarelli noted. "However, repurchases in quarter-one slowed to just $539 million from average of $2.1 billion per quarter in 2017 and 2016." Walmart will only be able to accomplish $6 billion of buybacks for 2018, Ciccarelli estimates. For context, Walmart's buyback plan is fairly large. In <a href="http://www.businessinsider.com/trump-tax-reform-plan-repatriation-14-us-companies-with-most-cash-overseas-2017-9?utm_source=markets&amp;utm_medium=ingest">a year of heavy buyback activity</a>, Apple announced one of the largest buyback plans of all. <a href="http://markets.businessinsider.com/news/stocks/apple-stock-price-what-to-do-with-huge-cash-pile-2018-4-1022917605">The tech behemoth is planning to repurchase $25 billion of its own stock over the next 5 years</a>. Walmart is down 14.6% this year. <div class="KonaFilter image-container display-table"><div><div class="image on-image"><a href="http://markets.businessinsider.com/stocks/wmt-stock"></a>Markets Insider</div></div></div> <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/ian-bremmer-globalism-american-dream-dead-chinese-dream-alive-2018-5">Ian Bremmer: Why the American dream doesn't exist anymore</a></h3> <div> </div> </div>

Walmart's Flipkart deal has one analyst questioning whether the company can fulfill a big promise it just made to shareholders

While discount-hungry consumers might be rejoicing at news of the Walmart-<keyword id="6354742" type="LOCATION" weightage="20" keywordseo="Flipkart">Flipkart</keyword> deal, wherein the US retail giant plans to purchase a majority stake in Flipkart for $15 billion, it also has a major detractor for the very same reason. The Confederation of All-India Traders (CAIT), a national association of small businesses and traders, has said that the proposed deal will hurt competition and encourage further <a href="https://www.businessinsider.in/India-your-e-commerce-discounts-are-safe/articleshow/63928216.cms">loss leadership </a>and “predatory pricing” tactics in India’s e-commerce market. It also observed that <keyword id="80487" type="ORGANIZATION" weightage="100" keywordseo="walmart">Walmart</keyword> was choosing to enter India via the e-commerce route after being denied entry to the country’s multi-brand retail sector. The trade body called on the Indian government to form a national regulator exclusively for the e-commerce sector and to put the Walmart-Flipkart deal on ice until such a body had been formed. Flipkart’s board is said to have already approved a sale to Walmart, leaving competitor <keyword id="18635" type="ORGANIZATION" weightage="20" keywordseo="Amazon">Amazon</keyword> in the lurch. The deal, which is the largest in India’s retail sector, will have widespread implications for the country’s fast-growing online shopping market, which is shaping up to be a duopoly featuring Flipkart and Amazon. The Indian e-tailer will get access to Walmart’s products while the latter will be able to leverage Flipkart’s well-oiled logistics and supply chain network. However, the deal could harm India’s small businesses, especially given Walmart’s habit of driving down its suppliers margins in order to keep prices low. Earlier this week, another trade body, the All India Online Vendors' Association (AIOVA ) said that the 3,500 sellers registered with it were <a href="https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/sellers-on-flipkart-jittery-ahead-of-deal-with-walmart-aiova/articleshow/64028643.cms">uncertain as to their future</a> in light of the deal. If Walmart were to introduce its own private labels in general merchandise to the online shopping platform, it could crowd out domestic suppliers, the AIOVA said. There are also concerns that Flipkart’s algorithm could give an unfair advantage to Walmart’s labels. The Indian government, which has been aware of these issues for a while, is set to launch a <a href="https://economictimes.indiatimes.com/small-biz/policy-trends/e-commerce-policy-framework-to-be-ready-in-6-months/articleshow/63902314.cms">regulatory framework for the e-commerce sector</a> in six months. The policy framework is expected to address the issues of discounts, foreign investments and a lack of competition. The protests from trade bodies are not the only hurdle that the Walmart-Flipkart deal is facing. Japan’s Softbank, which owns a 20% stake in Flipkart, is looking for ways to offload its holding to Walmart without <a href="https://www.livemint.com/Industry/AqFDQe7iRwScMK6Rn2bxAL/SoftBank-weighs-options-to-cut-tax-liability-in-Flipkart-sta.html">incurring a heavy tax bill</a>. It could even delay the stake sale until next year in order to reduce its tax liability.

India's small businesses are against Walmart’s acquisition of Flipkart

<ul><li><keyword id="80487" type="COMPANY" weightage="20" keywordseo="walmart">Walmart</keyword> likely to purchase 75% stake in <keyword id="6354742" type="COMPANY" weightage="20" keywordseo="Flipkart">Flipkart</keyword>, making it the largest <keyword id="30334" type="ORGANIZATION" weightage="20" keywordseo="acquisition">acquisition</keyword> deal for the company. </li><li>Alphabet Inc., Google’s parent company may also be looking to invest in Flipkart. </li><li><keyword id="225032" type="PERSON" weightage="20" keywordseo="Sachin-Bansal">Sachin Bansal</keyword>, Flipkart co-founder, might be stepping down.</li></ul>Update: Flipkart's board has <a href="https://www.bloomberg.com/news/articles/2018-05-04/flipkart-board-is-said-to-approve-15-billion-deal-with-walmart" data-type="tilCustomLink">reportedly</a> approved a deal for Walmart to acquire 75% of the Indian e-commerce company. The Walmart-Flipkart drama deal is <a href="http://www.bgr.in/news/walmart-acquires-flipkart-buys-73-percent-stake-usd-14-billion-amazon-binny-sachin-bansal-ceo-kalyan-krishnamurthy/">reportedly</a> finalised. The American company has apparently agreed to purchase a 73% stake in the Indian online shopping portal, taking Flipkart’s <a href="https://factordaily.com/walmart-to-buy-73-per-cent-of-flipkart/">valuation</a> to somewhere between $20-22 billion. This means the American giant will be spending at least $14.6 billion in the cash-and-stock buyout. Both the companies have signed tentative agreements on May 3, 2018, and the deal will apparently involve a mixture of cash and stock, with the cash component amounting to around 55%. Event Alphabet Inc., Google’s parent company, might a part of this agreement by way of a $3 billion investment. But there’s more to this merger than just the two company’s coming together. While <keyword id="6379357" type="PERSON" weightage="20" keywordseo="kalyan-krishnamurthy">Kalyan Krishnamurthy</keyword> will continue as Flipkart’s CEO, the company’s founder, Sachin Bansal will <a href="https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/walmarts-entry-into-flipkart-may-see-sachin-bansals-exit/articleshow/64023197.cms?from=mdr">probably</a> be stepping down. Not only will he be leaving the company’s day-to-day activities, he will also be giving up his seat on the board of directors. Co-founder, <keyword id="6364080" type="PERSON" weightage="20" keywordseo="binny-bansal">Binny Bansal</keyword>, will probably remain after the merger since reports have indicated that Walmart is keen on keeping one of them. The Walmart-Flipkart deal has ruffled a lot of feathers but despite the turn out, the company’s biggest investor, <keyword id="163404" type="COMPANY" weightage="20" keywordseo="Softbank">SoftBank</keyword>, will be leaving the foray. They weren’t particularly amped about the deal when it was being initiated and now that it seems to be final, SoftBank plans on selling off its 25% stake in the company to earn nearly $5 billion. Essentially, SoftBank’s doubled their investment of $2.5 billion in less than a year. Flipkart’s other investors, like Tencent, Microsoft and Tiger Global aren’t looking to cash out just yet. The conclusion of this deal will ideally result in one of the largest acquisitions involving an Indian company. It will also be one the biggest acquisition deals by Walmart.

Indian unicorn Flipkart's board approves $15 billion deal with Walmart

<ul><li><keyword id="80487" type="ORGANIZATION" weightage="20" keywordseo="walmart">Walmart</keyword> now owns a 77% stake in <keyword id="6354742" type="PERSON" weightage="100" keywordseo="Flipkart">Flipkart</keyword>.</li><li>The company will invest $16 billion for its stake.</li><li>Flipkart founder, <keyword id="225032" type="PERSON" weightage="20" keywordseo="Sachin-Bansal">Sachin Bansal</keyword>, is exiting the company, as is chief investor <keyword id="163404" type="ORGANIZATION" weightage="20" keywordseo="Softbank">Softbank</keyword>.</li></ul> The Walmart-Flipkart deal is finally official, with the US-based retail giant acquiring 77% stake in the Indian unicorn. Flipkart’s chief investor Softbank is selling off its shares, as is its founder Sachin Bansal. The deal has been in the works since September 2016. At the time, Walmart wanted to acquire a minority stake in the company. Today’s announcement marks a landmark in both the Indian startup and e-commerce industry. Flipkart has been one of the biggest success stories in the country, starting from a 2BHK apartment over a decade ago. Here’s how the company’s journey played out. The Journey 
	
	
	
	
	
	
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 <ul><li>Flipkart began in 2007, when the Indian e-commerce market was untapped. Sachin Bansal and <keyword id="6364080" type="PERSON" weightage="20" keywordseo="binny-bansal">Binny Bansal</keyword>, the founder of Flipkart, began the company as a replica of <keyword id="18635" type="LOCATION" weightage="20" keywordseo="Amazon">Amazon</keyword> for the Indian market.</li></ul><ul><li>It opened its first office in Bangalore in 2008 followed by expansions in Delhi and Mumbai. It even launched its 24x7 customer service too.</li></ul><ul><li>In 2009, Accel Partners invested $1 million in the company.</li></ul><ul><li>In 2010 they pioneered the Cash-on Delivery payment mode in India. With this, the company launched its logistics department Ekart and announced a 30 day return policy.</li></ul><ul><li>In 2011, Flipkart launched their digital wallet, and acquired Chakpak and Mime360. By now they delivered to over 600 cities.</li></ul><ul><li>In 2012, they launched their mobile app, bringing the marketplace in the hands of the consumer.</li></ul><ul><li>Flipkart also introduced the Next Day Shipping Guarantee in 2013.</li></ul><ul><li>It raised more funding, worth $160 million in 2013.</li></ul><ul><li>Over the years, the company grew exponentially with acquisitions of e-tailers like Myntra and WeRead. Huge investments even came in from investors across the globe. </li></ul><ul><li>In 2016, it was the first indian app to cross 50 million users, while it also crossed the 100 million registered user threshold.</li></ul><ul><li>The biggest investment came in from Japanese SoftBank, which made a $2.5 billion bet on the Indian unicorn and e-commerce giant. .</li></ul><ul><li>Sachin Bansal, founder of Flipkart, stepped down from his post as the CEO in 2016. This was filled in 2017 by <keyword id="6379357" type="PERSON" weightage="20" keywordseo="kalyan-krishnamurthy">Kalyan Krishnamurthy</keyword>, who took over from Binny Bansal.</li></ul><ul><li>Flipkart acquired Myntra for $300 million in 2014 and <keyword id="6388367" type="LOCATION" weightage="20" keywordseo="jabong">Jabong</keyword> for $70 million in 2016.</li></ul><ul><li>In 2018, the company consolidated all its Bangalore offices into one large campus with an area of .83 million square feet.</li></ul><ul><li>In terms of finances, <keyword id="3515858" type="ORGANIZATION" weightage="20" keywordseo="flipkart-group">Flipkart Group</keyword> incurred losses of ₹87.7 billion attributable to the owners of the company in FY17, which rose from ₹52.16 billion in FY16. Consolidated revenue increased by 29% to ₹19,855 crore in FY17.</li></ul><ul><li>Flipkart had wiped out half of its $6.1 bn investments as <a href="https://www.bloombergquint.com/business/2018/03/21/flipkarts-losses-have-wiped-out-half-of-66-billion-injected-by-investors">of early 2018</a>.</li></ul><ul><li>As of now the company is valued at $20 billion.</li></ul>

How Flipkart went from being an online bookseller to India’s biggest e-commerce story

<ul><li>Competition heats up after <keyword id="80487" type="COMPANY" weightage="20" keywordseo="walmart">Walmart</keyword> closes its $16 billion acquisition of <keyword id="6354742" type="COMPANY" weightage="20" keywordseo="Flipkart">Flipkart</keyword>.</li><li>Alibaba and <keyword id="18635" type="CITY" weightage="20" keywordseo="Amazon">Amazon</keyword> are said to be eyeing large investments of their own.</li><li>Conventional retail and <keyword id="35621" type="PERSON" weightage="20" keywordseo="e-commerce">e-commerce</keyword> players are coming together for a hybrid online-offline business model.</li></ul>A turf war is about to break out among Walmart, Amazon Inc. and <keyword id="163405" type="COMPANY" weightage="20" keywordseo="Alibaba-Group">Alibaba Group</keyword> as the retail giants make aggressive moves to expand into <keyword id="3658" type="COUNTRY" weightage="20" keywordseo="India">India</keyword>. And it is highly likely that this will lead to a massive shakeup of the Indian retail space. Last week, Walmart said it had <a href="https://www.businessinsider.in/indias-competition-regulator-has-given-the-walmart-flipkart-deal-a-greenlight/articleshow/65337242.cms">closed</a> the $16 billion (₹1,118 billion) deal to buy the majority (77%) of Flipkart, India’s largest e-commerce company, following regulatory approval. This is Walmart’s biggest acquisition till date. In its aftermath, Alibaba and Amazon are said to be eyeing large investments of their own, according to media reports. Alibaba is said to be <a href="https://www.livemint.com/Companies/1mvbhDUjZd9khrSUroW5MM/Alibaba-may-invest-5-billion-in-JV-with-Reliance-Retail.html">considering</a> a $5 billion (₹350 billion) investment into a joint venture with <keyword id="58448" type="COMPANY" weightage="20" keywordseo="Reliance-Retail">Reliance Retail</keyword>, India’s largest retailer in terms of sales, in part to take on competition from Amazon and Flipkart. While Amazon, along with co-investors, is mulling an investment in the Aditya Birla Group-owned grocery chain, More, for an enterprise valuation between ₹45 billion and ₹50 billion. Alibaba has reportedly also held talks with other Indian retail chains including Future Retail. In the past few years, Amazon has pumped in over $5 billion into India, its fastest growing market. Amazon and Walmart have been in fierce competition in their home market, the US, for quite some time, while Alibaba and Amazon are head-to-head in China. Some fear that Walmart’s push into India could potentially have an adverse impact on the larger Indian retail space in the long term, particularly on the small brick and mortar retailers in the country. A nation-wide trade lobby group plans to protest the Flipkart acquisition by going on a nationwide strike in the coming months. Currently, over 95% of India’s consumer retail market remains unorganised, representing a huge untapped opportunity for organised retail chains. India has long restricted <keyword id="44749" type="ORGANIZATION" weightage="20" keywordseo="Foreign-Direct-Investment">foreign direct investment</keyword> in multi-brand retail to protect local grocers but allows 100% foreign direct investment in e-commerce companies that use the “marketplace” model. It is currently considering bringing in regulation for the e-commerce space and according to a recent draft proposal, may allow 49% foreign investment in e-commerce companies that use the inventory model. Walmart in its recent statement said its future investments into India will be directed at supporting farmers, supply chain development and reducing food waste. Strategy shift: Going hybrid Walmart’s acquisition of Flipkart and Amazon’s interest in More are the latest examples of large retailers adopting a hybrid business model of offline and online after years of experts predicting the disruption of traditional retail by e-commerce companies. Alibaba and Amazon have recently been focusing heavily on offline and online in their home markets – Amazon with its acquisition of grocery chain Whole Foods and Alibaba’s ‘New Retail’ strategy, which combines e-commerce and conventional retail in China. That rationale appears to be flowing down into their India strategy as well, points out Mrigank Gutgutia, engagement manager with RedSeer Management Consulting. Amazon also owns a 5% stake in Indian brick and mortar retail chain Shoppers Stop. While the Walmart-Flipkart deal is certainly encouraging for e-commerce players, even after 10 years and 100 million shoppers, Indian e-tailers have thus far managed to penetrate only about 2.7% of the overall Indian retail market, indicating the pressure to diversify their reach, notes Gutgutia. “While e-tailers have got their growth mojo back, everyone is starting to realise that pure online models will only let them capture limited pie,” said Gutgutia. “There is a need for change,” he added. Overall, as Indian e-commerce market matures further, e-tailers are realising that pure discount-driven models are no longer going to work. “What is needed is genuine innovation to cater to specific traits and needs of Indian buyers -- especially in offline-heavy categories like fashion and grocery,” said Gutgutia. According to RedSeer, this multi-channel approach will become dominant among organised retail players in the coming years, particularly for e-commerce players. Other e-tailers who have ventured into offline include furniture retailer Pepperfry with its studios and fashion retailer Myntra's Roadster stores. Regardless of how the investment landscape pans out and who buys whom, and as competition gets more intense for existing e-commerce and offline retailers, ultimately shoppers and customers are expected to win. As for small retailers, Gutgutia says they could see a positive impact if they work on a partnership model with organised retailers.

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